1. Employee of a grant-in-aid institution dismissed for misconduct, later reinstated by appellate authority; dispute over liability for payment of retiral benefits. (Para 2 , 4 , 5 , 6 )
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2024 Supreme(SC) 1142
SUPREME COURT OF INDIA
J.K. MAHESHWARI, RAJESH BINDAL, JJ.
Nutan Bharti Gram Vidyapith – Appellant
Versus
Government of Gujarat and Another – Respondents
Civil Appeal No. 13958-13959 of 2024 [Arising Out of S.L.P. (C) No. 11733-11734 of 2023]
Decided On : 02-12-2024
Important Points
The court affirmed that under the Grant-in-Aid Scheme, the State is liable for the payment of retiral benefits to employees, and the appellant cannot shift this burden due to its litigation conduct.
Subject
Employment Law - Retiral Benefits
Headnote
(A) Grant-in-Aid Scheme - Pension Scheme for the teaching/non-teaching staff in the Gram Vidyapeeth, Government of Gujarat - The appellant college challenged the High Court's order directing it to pay retiral benefits to the respondent-employee, arguing that the State is liable under the Scheme. The court found that the Scheme does not allow shifting the burden of payment to the State and upheld the appellant's position. (Paras 8, 13, 16)
(B) Employment Law - Dismissal and Reinstatement - The court discussed the nature of the charges against the respondent and the appropriateness of the dismissal. It concluded that the appellant's actions were within jurisdiction and did not warrant the burden of retiral benefits. (Paras 14, 15)
Facts of the case:
The respondent was dismissed for misconduct, reinstated by the appellate authority, and the appellant was directed to pay retiral benefits, which it contested.
Findings of Court:
The court ruled that the State is liable for the retiral dues as per the Scheme, and the appellant's conduct did not justify shifting the liability.
Issues: The main issue was whether the appellant or the State is liable for the retiral benefits under the applicable Scheme.
Ratio Decidendi: The court held that the Scheme clearly delineates the State's liability for pension and gratuity, and the appellant's litigation conduct does not alter this obligation.
Result: Appeals allowed.
(B) Employment Law - Dismissal and Reinstatement - The court discussed the nature of the charges against the respondent and the appropriateness of the dismissal. It concluded that the appellant's actions were within jurisdiction and did not warrant the burden of retiral benefits. (Paras 14, 15)
Facts of the case:
The respondent was dismissed for misconduct, reinstated by the appellate authority, and the appellant was directed to pay retiral benefits, which it contested.
Findings of Court:
The court ruled that the State is liable for the retiral dues as per the Scheme, and the appellant's conduct did not justify shifting the liability.
Issues: The main issue was whether the appellant or the State is liable for the retiral benefits under the applicable Scheme.
Ratio Decidendi: The court held that the Scheme clearly delineates the State's liability for pension and gratuity, and the appellant's litigation conduct does not alter this obligation.
Result: Appeals allowed.
Legal Category Hierarchy
Advocates appeared:
For the Petitioner(s): Mr. Nikhil Goel, Sr. Adv. Mr. Pradhuman Gohil, Adv. Mrs. Taruna Singh Gohil, AOR Mr. Alapati Sahithya Krishna, Adv. Mr. Rushabh N. Kapadia, Adv. Mr. Siddharth Singh, Adv. Ms. Siddhi Gupta, Adv.
For the Respondent(s): Ms. Swati Ghildiyal, AOR Ms. Devyani Bhatt, Adv. Mr. Bhaskar Tanna, Sr. Adv. Dr. Purvish Jitendra Malkan, Sr. Adv. Ms. Dharita Malkan, Adv. Mr. Alok Kumar, Adv. Ms. Khushboo Aakash Sheth, AOR
For the Petitioner(s): Mr. Nikhil Goel, Sr. Adv. Mr. Pradhuman Gohil, Adv. Mrs. Taruna Singh Gohil, AOR Mr. Alapati Sahithya Krishna, Adv. Mr. Rushabh N. Kapadia, Adv. Mr. Siddharth Singh, Adv. Ms. Siddhi Gupta, Adv.
For the Respondent(s): Ms. Swati Ghildiyal, AOR Ms. Devyani Bhatt, Adv. Mr. Bhaskar Tanna, Sr. Adv. Dr. Purvish Jitendra Malkan, Sr. Adv. Ms. Dharita Malkan, Adv. Mr. Alok Kumar, Adv. Ms. Khushboo Aakash Sheth, AOR
Table of Contents
2. Appellant contends State liability under the applicable pension scheme; State argues appellant's prolonged litigation justifies shifting the financial burden to the institution. (Para 8 , 9 , 10 , 11 )
3. The pension scheme mandates payment from government treasurers without exceptions for institutional conduct; the institution's actions were not without jurisdiction, distinguishing it from cited precedents. (Para 13 , 14 , 15 )
4. In grant-in-aid institutions, liability for retiral benefits rests with the State as per the governing scheme, regardless of the institution's litigation conduct. (Para 13 )
5. Appeal allowed; High Court order modified to hold the State liable for payment of retiral dues to the employee. (Para 16 )
6. Who is liable for retiral benefits in a grant-in-aid institution under the applicable pension scheme?
The State is liable to pay pension and gratuity from the Government Treasurers, as the scheme provides for these benefits to be sanctioned by the Director of Higher Education and paid by the State. (Para 8 , 13 )
7. Can the State shift the liability of retiral benefits to a grant-in-aid institution due to the institution's conduct in litigating?
No. The court held that the pension scheme contains no exception allowing the State to deny payment or shift the burden to the institution based on the institution's conduct in fighting litigation. (Para 13 )
8. Does the lack of jurisdiction in terminating an employee affect the liability for retiral benefits?
While termination without jurisdiction may shift liability to the institution, where the institution acted within jurisdiction—even if the punishment was later deemed too harsh—the State remains liable under the scheme. (Para 14 , 15 )
JUDGMENT :
RAJESH BINDAL, J.
1. Leave granted.
2. The Private College1 [Nutan Bharti Gram Vidyapith] covered under the Grant-in-Aid scheme of the State Government has filed the present appeal impugning the orders passed by the High Court2 [High Court of Gujarat at Ahmedabad] dated 26.07.20223 [Letters Patent Appeal Number 1456 of 2010] and 21.04.2023.4 [Miscellaneous Civil Application (for Review) Number 01 of 2022]
3. At the time of hearing, the learned senior counsel appearing for the appellant submitted that he only wishes to press the claim regarding liability of the appellant-college to pay retiral benefits to the respondent-employee.
4. Briefly noticed, the facts are that the respondent no. 2 was appointed as lecturer by the appellant. On account of certain misconduct, he was issued a chargesheet on 07.08.1993. After inquiry, he was dismissed from service on 06.06.1994.
4.1 Aggrieved by the dismissal, the respondent no. 2 preferred an appeal to the Joint Director of Higher Education (appellate authority). The said appeal was dismissed as not maintainable vide order dated 15.11.1994.
4.2 By order dated 20.03.1996, in an application5 [Special Civil Application Number 12822 of 1994] filed by the respondent no. 2 before the High Court, his appeal before the Joint Director of Higher Education was held to be maintainable and the same was directed to be heard by appellate authority-respondent no. 1. The appeal was allowed vide order dated 21.08.1996.
4.3 Aggrieved against the aforesaid order, the appellant preferred an application6 [Special Civil Application No. 7111 of 1996] before the High Court where the above said order was set aside and the matter was directed to be heard afresh vide order dated 07.10.1996. Thereafter vide order dated 02.03.2000, the appeal filed by the private respondent was allowed by appellate authority. He was directed to be reinstated as the dismissal was found to be an extreme punishment.
5. The appellant challenged the aforesaid order before the High Court by filing an application.7 [Special Civil Application Number 4357 of 2000]. The Learned Single Judge vide order dated 30.06.2010, noticing the fact that the private respondent had already superannuated, upheld the order of reinstatement passed in the aforesaid appeal. However, the High Court directed the appellant to pay back wages to the extent of 75%. The aforesaid order was challenged by the appellant by filing Letters Patent Appeal.8 [Appeal No. 1456 of 2010]. Vide order dated 26.07.2022, the appeal was disposed of while passing the following directions:
“Private respondent No. 2 would not be entitled for any backwages as ordered by learned Single Judge.
Services of the private respondent No. 2 shall be treated as continuous service from the date of his appointment till date of his superannuation. Private respondent shall be entitled for all the retiral benefits of his employment.
All the benefits shall be granted to the private respondent No. 2 by the appellant as well as by the State authority within a period of eight weeks from the date of receipt of this order along with interest, as per the prevailing policy in such cases.
If the amount is not paid within a period of eight weeks, the appellant as well as respondent authority shall pay the entire amount along with interest at the rate of 9% per annum till it is actually paid.”
6. A perusal of the aforesaid direction shows that the back wages granted to the respondent no. 2 were set aside and the appellant as well as the State were directed to pay retiral dues to the respondent No. 2. Aggrieved against the aforesaid order, the State as well as the appellant filed Review Petitions.9 [Miscellaneous Civil Application Number 01 of 2022 and Miscellaneous Civil Application Number 01 of 2023]. The review filed by the State was allowed vide order dated 21.04.2023 and it was directed that the appellant shall be liable to pay the retiral dues. The order as modified is extracted below:
“7. We do recollect that the p
